AA to start DFW to Beijing

[topDawg]

I've said it before, I predicted failure for DFW-HKG and DFW-PVG, and it looks like I was wrong. Of course, I was predicting failure when fuel was more than $3/gal and there didn't seem to be any reasons on the horizon (that I recognized) for the price of fuel to collapse by the end of 2014. Nobody knows if it will remain at today's bargain prices, but long-haul routes just got a LOT cheaper to operate.

If fuel stays around a buck fifty a gallon for a while, I fully expect DL to consider more Asian flights from ATL besides NRT. If it works for AA at DFW, I don't see why it wouldn't work from ATL.

And, if fuel prices stay relatively cheap for a while, does that new SEA mega-Asia hub make as much sense as it did when fuel was more than double today's spot prices? DL was trading O&D for lower operating cost due to the shorter stage lengths. Might turn out that at cheaper fuel prices, DL doesn't try to convince so many people that a stop at SEA is the best thing ever between the USA and Asia.

Not for a while. Filling out LAX and MSP will be the next places. (as well as trying to crack into the US-HKG marketplace. United and CS have a big hold on the market.) As it is right now Delta doesn't have the aircraft for ATL-China. The reason they are able to start LAX-PVG is due to the short flight(compared to a East coast route) and that the flight fits perfectly between NRT/SYD. With the parking of the 747s at best Delta *might* come up with the slack for a short route like LAX-PEK. MSP-PVG/PEK JFK-China ATL-China are out till the 359s show up in a few years. 
 
Just a note, right now Delta is building its network and making choices on a fuel projection at 2.80 cent a gallon. Fuel will have to stay low for a while and show signs of staying low for a while before Delta starts lowering internal fuel projections. 
 
as for SEA I don't see how low fuel changes it. It is the most logical connecting point from the western US to Asia. (and has fairly healthy O&D) 

 

[topDawg]

This thread is about PEK service from DFW and we are now back to profit sharing
 
It's hard to believe that someone might want to fly to NGO, TPE, Chengdu, etc
 
Plenty of opportunity to grow from multiple hubs

Delta has to win somehow. Every thread Delta must win.... 

 

[WorldTraveler]

you don't think AA and UA doesn't believe the same thing?

you better believe they do.

and DL has the aircraft to fly ATL-PVG. They have done it before. DL has 10 77Ls that can fly between just about any two points on the globe.

the reason why DL is not focusing on building ATL to Asia is because there are multiple gateways that make more sense to develop.

SEA is the shortest and can be developed with relatively short routes and relatively low cost 332s and 767s while ATL and JFK take 772s at least, maybe 77Ls.

you are right that LAX is a strategic and important market and DL will focus on the west coast; I have repeatedly said that DL's focus is on building out the western US now that NYC is largely down to fine tuning.

the only surprise is that DL decided to jump into the LAX - China market at this point but I have said before that I believe it is related to ensuring that DL maintains a strategic advantage over its competitors even if AA succeeds at moving the SEA-HND route.

and btw DOT data once again confirms that DL is the largest carrier in the LOCAL LAX to Asia market. Not AA and not UA.

UA carries the most local LAX to Europe passengers and also the most LAX to Latin America.

you are right that DL is not going to make major changes to its network unless fuel stays low enough and is expected to do so for an extended period of time.

however, any airline knows there is a ramp up period for new routes. If that ramp up period can be done now while fuel is much cheaper, it makes sense to start some routes now that would have made sense to start at some point in the next few years, even at higher fuel prices.

thus, building out SEA could be accelerated based on lower fuel... but DL was going to do it anyway. the cost of building SEA out is just reduced.

 

[topDawg]

you don't think AA and UA doesn't believe the same thing?

you better believe they do.

and DL has the aircraft to fly ATL-PVG. They have done it before. DL has 10 77Ls that can fly between just about any two points on the globe.

the reason why DL is not focusing on building ATL to Asia is because there are multiple gateways that make more sense to develop.

SEA is the shortest and can be developed with relatively short routes and relatively low cost 332s and 767s while ATL and JFK take 772s at least, maybe 77Ls.

you are right that LAX is a strategic and important market and DL will focus on the west coast; I have repeatedly said that DL's focus is on building out the western US now that NYC is largely down to fine tuning.

the only surprise is that DL decided to jump into the LAX - China market at this point but I have said before that I believe it is related to ensuring that DL maintains a strategic advantage over its competitors even if AA succeeds at moving the SEA-HND route.

and btw DOT data once again confirms that DL is the largest carrier in the LOCAL LAX to Asia market. Not AA and not UA.

UA carries the most local LAX to Europe passengers and also the most LAX to Latin America.

you are right that DL is not going to make major changes to its network unless fuel stays low enough and is expected to do so for an extended period of time.

however, any airline knows there is a ramp up period for new routes. If that ramp up period can be done now while fuel is much cheaper, it makes sense to start some routes now that would have made sense to start at some point in the next few years, even at higher fuel prices.

thus, building out SEA could be accelerated based on lower fuel... but DL was going to do it anyway. the cost of building SEA out is just reduced.

10 airplanes flying 
LAX-NRT
LAX-SYD
LAX-PVG
ATL-DXB
ATL-JNB
ATL-NRT 
 
They don't have the slack for ATL-PVG. (and don't have the slack in the 77E fleet to replace an LR route to create space.) 
 
As it is for now Delta is pretty much done growing internationally till the 359s come. Might be able to squeeze a short route like LAX-PEK out of the fleet but nothing long like ATL or JFK-China.  

 

[eolesen]

Seems that AA knows that.

 

[WorldTraveler]

if DL used other aircraft besides a 772LR which is just getting warmed up on LAX-PVG, then yes, DL could do a lot more with its 777 fleet.

the reason why LAX-NRT is a 777 is because it rotates off of the SYD flight.

we have yet to see route assignments for the new 333s but I would bet at least some will be used on LAX-NRT

standard 333s have been used on LAX-NRT before so they could be used until the HGW 333s arrive later.

AA, DL, and UA have enough widebody aircraft to do what it needs to do.

any one of the three that thinks they can do something for which a strategic response is not possible is making a mistake.

AA is starting DFW-PEK because DFW has been the best performing part of AA's TPAC network.

The west coast to Asia is and will increasingly be the most competitive part of each of the 3 US carriers' Asia networks.

 

[WorldTraveler]

on the earnings conference call, AA execs said this is probably the last AA route to Asia while they are still looking at additional LAX to Asia service.

 

[FWAAA]

on the earnings conference call, AA execs said this is probably the last AA route to Asia while they are still looking at additional LAX to Asia service.

I can't be sure, but I think you meant to say the last DFW route to Asia. Is that correct?

 

[commavia]

http://www.thestreet.com/story/13022554/1/american-eyes-lax-pacific-wont-say-where-boeing-787-will-go.html
 

Asked whether American is "close to the end of (adding) Asian routes" after adding Dallas to Hong Kong and Shanghai in June, [AA] President Scott Kirby responded, "We are at the end of new Dallas routes but we'll still be looking (for) and pursuing opportunities out of LAX."
 
[...]
 
Kirby said new service to Asia typically takes a couple of years to become profitable, but he added, "I'm pretty sure that with fuel prices where they are, we expect all (our) Asia routes to be profitable in 2015."

 
(emphasis mine)
 
Well isn't that interesting ...

 

[IORFA]

Good to hear. Plus added coach seats, international WIFI, power ports at each seat and a better B/C seat on the 777-200ER won't hurt either!

 

[WorldTraveler]

I can't be sure, but I think you meant to say the last DFW route to Asia. Is that correct?

yes, that is correct.

thank you.
 
 

http://www.thestreet.com/story/13022554/1/american-eyes-lax-pacific-wont-say-where-boeing-787-will-go.html
 
 
(emphasis mine)
 
Well isn't that interesting ...

competition always is.

and note that other carriers aren't stopping growing LAX either.

and while AA might have as a goal to grow at LAX, based on the most recent quarter, AA is #3 out of the 3 US biggies in local revenue from LAX to Asia (either defined as Asia as a whole or East Asia) with the leader's local market revenue to Asia more than twice that of AA's PLUS as of this summer with the addition of a 3rd US carrier LAX-PVG route, the market leader will have more than 1.5X the number of seats from LAX to Asia.

so, again, it is great to think that AA can build its Asia network from LAX but other carriers aren't standing still and AA's revenue performance is by far the weakest not only of US carriers but compared to foreign carriers as well.

it is also worth noting that Skyteam has the most codeshare flights on both ends of the LAX-PVG route while Star comes in 2nd.
 

Good to hear. Plus added coach seats, international WIFI, power ports at each seat and a better B/C seat on the 777-200ER won't hurt either!

all of that is the norm on other carriers in the market except that they don't have 10 abreast seating anywhere in coach.